Egg Harbor Associates (Associates) appeals from a decision of the Director of the Division of Coastal Resources, Department of Environmental Protection (DEP) imposing "fair share" housing conditions upon a permit issued to Associates under the Coastal Area Facility Review Act (CAFRA) (N.J.S.A. 13:19-1 et seq.) for a waterfront development including 1530 proposed housing units in Egg Harbor Township, Atlantic County. The conditions challenged on the appeal are these:

The applicant shall be required to provide a percentage of low and moderate income housing. Specifically, the applicant shall submit a detailed Low and Moderate Income Housing Plan to the Division for review and approval, prior to construction, that includes:

a. Provide that of the 1,530 housing units, 10% shall be low income units and 10% shall be moderate income units. The units may be built on-site or off-site provided that the units comply with the Rules on Coastal Resources and Development, particularly concerning public services.

b. The 10% low income housing shall be Section 8 housing or any government subsidy program which is comparable to or a replacement for Section 8 housing.

c. The applicant shall make all possible attempts to secure Section 8 funding and shall submit quarterly reports documenting such attempts to the Division. Failure to pursue such efforts to the fullest extent possible shall be ground for revocation of the CAFRA permit.

d. If the applicant does not obtain a commitment for Section 8 funding within three years of the date of issuance of the CAFRA approval, the applicant shall donate appropriate improved lands or funds to a housing agency or to a non-profit developer who is prepared to seek subsidies and construct the units.

e. The applicant may provide the 10% of moderate income units through either Section 235 housing, through any government subsidy program which is comparable to or a substitute for Section 235, or through unsubsidized units which do not sell for more than twice the income level for Section 235 housing for the bedroom size being constructed.

f. The applicant shall establish a mechanism for assuring that these moderate income units are sold only to moderate income persons.

g. The applicant shall establish a mechanism for establishing re-sale controls on these moderate income units.

h. The applicant shall establish a timetable which insures that a reasonable proportion of the low and moderate income units will be built by no later than the occupancy date of 30% of the the other units in the project.

Associates applied on March 30, 1979 for a CAFRA permit to construct a large-scale planned unit development (N.J.A.C. 7:7E-8.11) on a 127.664-acre tract; the proposed development includes, in addition to the housing units, a 500-room hotel, 4200 parking places and 450,000 square feet of office, commercial and indoor recreational space. In December 1979 the DEP issued its Staff Preliminary Analysis which noted that "to appreciate the scope of this proposed development consider that in 1970 there were only 3489 occupied housing units in Egg Harbor Township (1970 Census) and that in 1978, only 1568 building permits were issued in all of Atlantic County." The analysis further found that although the proposed development "is being built in direct response to the expected housing growth pressures caused by casino gambling in the older, urban core of Atlantic City," the project "does not represent, strictly speaking, increased low and moderate income housing opportunities to relieve the housing burdens of the region"; that the DEP had requested the applicant to "address the feasibility of providing a reasonable amount of least-cost housing either on-site or within the region," and that the applicant has responded

The analysis asked that Associates document that contention:

The applicant shall submit documented rationale in support of the contention that the BayShore Centre project cannot feasibly support low or moderate income housing.

In addition, the applicant shall specify the extent of presently contemplated off-site commitments to provide least-cost housing within the region.

That request was made pursuant to N.J.A.C. 7:7E-8.6(a)*fn1 which required that housing developments approved under CAFRA "shall provide least-cost housing where feasible."

The question of the feasibility of the proposed development providing a fair share of the municipalities low and moderate cost housing requires substantive discussion with regard to the public and private sector financing mechanisms that would allow for the inclusion of a certain percentage of low-moderate income units.

The improved land costs per residential unit in the Bayshore Centre project is estimated to be in excess of $30,000-$35,000. This figure includes the cost of land and improvements, carrying costs of the property over the last two years, developer's profit and the added expense as a result of the need for pilings, estimated to range from 40 feet to 70 feet in depth. This figure does not include the costs associated with the construction of the residential units.

The high costs associated with development of the project site as well as the nature of the project has resulted in land costs of sufficient magnitude to eliminate the feasibility of public financing mechanisms. The project will be entirely financed through private organizations. Thus the financial feasibility of low income housing is nonexistent under existing subsidy programs.

It should be mentioned that conversations with contractors and officials within Egg Harbor Township indicate that a substantial quantity of the existing housing is in the low-moderate range and/or financed through public mechanisms. Of the estimated 6800 residential units in the Township, 1832 units are mobile homes, 600 others are FHA financed and 1300 others are financed by Section 235 and 236. This total represents approximately 50% of the total housing in Egg Harbor Township. It would appear that the Township has done its fair share to ...

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